Treasury Stock, at Cost, Common Shares – 26.9 at September 30, 2012 and 26.9 at December 31, 2011

(938

)

(937

)

Accumulated Other Comprehensive Income (Loss)

(30

)

(35

)

Total Stockholders’ Equity

1,199

1,263

Total Liabilities and Stockholders’ Equity

$

4,303

$

4,259

PLUM CREEK TIMBER COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

Nine Months Ended September 30,

(In Millions)

2012

2011

CASH FLOWS FROM OPERATING ACTIVITIES

Net Income

$

124

$

132

Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities:

Depreciation, Depletion and Amortization

87

70

Basis of Real Estate Sold

111

57

Equity Earnings from Timberland Venture

(42

)

(44

)

Distributions from Timberland Venture

56

56

Deferred Income Taxes

(1

)

2

Deferred Revenue from Long-Term Gas Leases (Net of Amortization)

(6

)

14

Timber Deed Acquired

(98

)

—

Pension Plan Contributions

(10

)

(3

)

Working Capital Changes Impacting Cash Flow:

Like-Kind Exchange Funds

—

—

Other Working Capital Changes

5

—

Other

11

10

Net Cash Provided By Operating Activities

237

294

CASH FLOWS FROM INVESTING ACTIVITIES

Capital Expenditures (Excluding Timberland Acquisitions)

(52

)

(43

)

Timberlands and Minerals Acquired

(18

)

(88

)

Other

(1

)

—

Net Cash Used In Investing Activities

(71

)

(131

)

CASH FLOWS FROM FINANCING ACTIVITIES

Dividends

(204

)

(204

)

Borrowings on Line of Credit

1,712

1,097

Repayments on Line of Credit

(1,709

)

(961

)

Proceeds from Issuance of Long-Term Debt

450

—

Debt Issuance Costs

(3

)

—

Principal Payments and Retirement of Long-Term Debt

(350

)

(49

)

Proceeds from Stock Option Exercises

5

9

Acquisition of Treasury Stock

(1

)

(16

)

Net Cash Used In Financing Activities

(100

)

(124

)

Increase (Decrease) In Cash and Cash Equivalents

66

39

Cash and Cash Equivalents:

Beginning of Period

254

252

End of Period

$

320

$

291

PLUM CREEK TIMBER COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

Quarter Ended September 30,

(In Millions)

2012

2011

CASH FLOWS FROM OPERATING ACTIVITIES

Net Income

$

59

$

50

Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities:

Depreciation, Depletion and Amortization

31

26

Basis of Real Estate Sold

36

14

Equity Earnings from Timberland Venture

(14

)

(14

)

Distributions from Timberland Venture

28

28

Deferred Income Taxes

—

(2

)

Deferred Revenue from Long-Term Gas Leases (Net of Amortization)

(1

)

2

Pension Plan Contributions

(3

)

(3

)

Working Capital Changes Impacting Cash Flow:

Like-Kind Exchange Funds

—

35

Other Working Capital Changes

7

(4

)

Other

5

5

Net Cash Provided By Operating Activities

148

137

CASH FLOWS FROM INVESTING ACTIVITIES

Capital Expenditures (Excluding Timberland Acquisitions)

(17

)

(15

)

Timberlands and Minerals Acquired

(5

)

(76

)

Net Cash Used In Investing Activities

(22

)

(91

)

CASH FLOWS FROM FINANCING ACTIVITIES

Dividends

(68

)

(68

)

Borrowings on Line of Credit

583

542

Repayments on Line of Credit

(683

)

(467

)

Proceeds from Issuance of Long-Term Debt

450

—

Debt Issuance Costs

—

—

Principal Payments and Retirement of Long-Term Debt

(350

)

—

Proceeds from Stock Option Exercises

2

—

Acquisition of Treasury Stock

—

(15

)

Net Cash Used In Financing Activities

(66

)

(8

)

Increase (Decrease) In Cash and Cash Equivalents

60

38

Cash and Cash Equivalents:

Beginning of Period

260

253

End of Period

$

320

$

291

PLUM CREEK TIMBER COMPANY, INC.

SEGMENT DATA

(UNAUDITED)

Nine Months Ended September 30,

(In Millions)

2012

2011

Revenues:

Northern Resources

$

185

$

167

Southern Resources

312

266

Real Estate

243

208

Manufacturing

246

208

Other

16

15

Eliminations

(17

)

(12

)

Total Revenues

$

985

$

852

Operating Income (Loss):

Northern Resources

$

15

$

17

Southern Resources

66

55

Real Estate

113

134

Manufacturing

22

12

Other ( A)

14

16

Other Costs and Eliminations, net

(46

)

(42

)

Total Operating Income

$

184

$

192

Adjusted EBITDA by Segment: (B)

Northern Resources

$

35

$

36

Southern Resources

118

92

Real Estate

225

192

Manufacturing

33

22

Other

14

16

Other Costs and Eliminations, net

(45

)

(41

)

Total

$

380

$

317

(A) During the first nine months of 2011, the company received a payment of $2 million for the settlement of a dispute that related to certain mineral rights. This amount is reported as Other Operating Gain/(Loss) in our Other Segment and is included in Other Operating Income (Expense), net in the Consolidated Statements of Income.

(B) Refer to the separate schedule, "Segment Data - Adjusted EBITDA" for reconciliations of Adjusted EBITDA to operating income and net cash provided by operating activities.

PLUM CREEK TIMBER COMPANY, INC.

SEGMENT DATA

(UNAUDITED)

Quarter Ended September 30,

(In Millions)

2012

2011

Revenues:

Northern Resources

$

65

$

68

Southern Resources

110

93

Real Estate

96

67

Manufacturing

85

67

Other

5

5

Eliminations

(7

)

(7

)

Total Revenues

$

354

$

293

Operating Income (Loss):

Northern Resources

$

5

$

7

Southern Resources

23

21

Real Estate

54

46

Manufacturing

9

3

Other

5

5

Other Costs and Eliminations, net

(17

)

(13

)

Total Operating Income

$

79

$

69

Adjusted EBITDA by Segment: (A)

Northern Resources

$

12

$

14

Southern Resources

42

35

Real Estate

90

60

Manufacturing

13

7

Other

5

5

Other Costs and Eliminations, net

(16

)

(13

)

Total

$

146

$

108

(A) Refer to the separate schedule, "Segment Data - Adjusted EBITDA" for reconciliations of Adjusted EBITDA to operating income and net cash provided by operating activities.

Plum Creek Timber Company, Inc

Segment Data - Adjusted EBITDA

Reconciliation of Operating Income and Net Cash

Provided by Operating Activities

(Unaudited)

We define Adjusted EBITDA as earnings from continuing operations, excluding equity method earnings, and before interest, taxes, depreciation, depletion, amortization, and basis in lands sold. Adjusted EBITDA is not considered a measure of financial performance under U.S. generally accepted accounting principles (U.S. GAAP) and the items excluded from Adjusted EBITDA are significant components of our consolidated financial statements.